The new method of holding stocks in the electronic form was introduced in 1996. The new system called a depository was put in place to hold stocks of all companies in electronic form on behalf of the investors and maintain a record of all “buy” and “sell” transactions. Technology had made it possible to provide banks with ease and convenience.
FUNCTIONS OF DEPOSITORIES
Depositories carry on many functions in the capital market, some of the functions are as follows,
- Depositories do maintain register of securities
- Issuance of International Securities Identification Number (ISIN) for all issues of securities
- Clearance and settlement of securities on the principle ‘Delivery versus payment’.
- It maintains records of buy and sell on behalf of investors
- It removed the hardship of handling physical stock
- It caters to both large and small investors through a network of intermediaries called depository participants.